There is a section of the Illinois Business Corporation Act (“BCA”) which addresses shareholder remedies, specifically Section 12.56. This section is utilized by attorneys and Court to address situations wherein a minority shareholder, or a group of minority shareholders, suffers damages due to the wrongful conduct of the shareholder or group of shareholders holding a majority ownership interest in a corporation. In these cases, the majority usually controls the Board of Directors, or votes in people to the Board who are aligned with them. Then the Board, which makes all the decisions for the company may be committing a number of wrongful acts such as failing to keep the minority apprised of the financial condition of the company, commingling corporate funds with their own personal funds, self dealing, creating conflicts of interests by favoring or steering business to other companies in which the majority shareholder(s) own an interest, paying exorbitant salaries or other expenses to themselves or certain officers to the detriment of the company and the minority shareholders, etc.

In these cases, minority shareholder(s) can file a lawsuit claiming oppression. Oppression can cover many different acts such as described above and others acts not detailed here due to space limitations. However, the BCA generally defines oppressions as “the directors are acting in an illegal, fraudulent, or oppressive way to the complaining shareholder” or “the corporate assets are being wasted”. If the minority shareholder(s) can prove that this section of the BCA was violated by the Board of Directors and/or the majority shareholder(s), then the BCA provides a wide variety of remedies to address damages suffered by the minority as a result of those wrongful acts. The Circuit Court of Illinois can:

1. Set aside an action of the corporation, board, or officers;

2. Cancel a provision of the bylaws;

3. Appoint an officer or director;

4. Order and accounting;

5. Appoint a custodian to manage the company;

6. Appoint a provisional director;

7. Submit the dispute to arbitration;

8. Force payments of dividends;

9. Award damages;

10. Force a shareholder buyout at fair market value;

11. Dissolve the corporation if no remedy above is adequate.

If you are a minority shareholder in a company and feel that you are not being dealt with in a fair manner by the majority shareholder(s), call Lavelle Law to discuss your options, including, but not limited to, filing litigation.